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Archives April 27, 2013 posted by

Bank deposits down by €3.7b in March

AS MUCH as €3.7 billion was taken out of the island’s banks in March, €0.9 billon in February and €1.7 billion in January, Central Bank of Cyprus (CBC) data showed yesterday.

Overall deposits in March were down 9.9 per cent to €63.7 billion compared to March 2012 when they stood at €70.7 billion, meaning that €7.0 billion left the island in the past 12 months but more than €5 billion of that was removed in the last three months alone.

In March, €3.7 billion in deposits took flight, €1.9 billion from third-country nationals, €1.3 billion belonging to Cypriots, and around €500 million belonging to other EU nationals.

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Archives April 26, 2013 posted by

Further easing of capital controls

THROUGH a tenth decree issued last night, the Central Bank further eased capital controls for transactions both within and outside the island.

Payments and money transfers (for any purpose) from one financial institution to another within Cyprus have been extended from €3000 to €10,000 monthly per individual.

Payments and transfers from one bank to another within Cyprus are now capped at €300,000 per transaction for the purchase of goods and services. Any transactions over and above this amount – again for the purchase of goods or services – is permitted provided that documentation is presented.

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Archives April 25, 2013 posted by

CBC: urgent need for rate reduction

THE CENTRAL Bank (CBC) is trying to create conditions under which banks could reduce their interest rates on deposits, which could eventually lead to a cut in borrowing rates, the regulator said yesterday.

“The CBC recognises that under the current circumstances … there is an urgent need for a reduction in deposit rates, which in turn will lead to lower borrowing rates,” CBC spokeswoman Aliki Stylianou said.

The CBC has proposed that a lender would have to keep additional equity when its rate on deposits exceeds Euribor (Euro Interbank Offered Rate) plus 300 basis points.

Stylianou said banks pass the cost of high deposit rates onto borrowing rates with negative effects.

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Archives April 24, 2013 posted by

Currency controls expected to be lifted ‘within weeks’

CURRENCY controls are expected to be lifted within the next few weeks, definitely within the next six months, finance minister Haris Georgiades has said.

Georgiades said he anticipated the controls, imposed after a chaotic bailout last month and which led to a lockdown of the banking system for 15 days would be eased in “days or weeks”.

Asked during a Reuters interview published yesterday whether measures would be eased in two, or six months, Georgiades said: “Definitely not six months. I am optimistic we shall be able to proceed much sooner.” 

Capital controls were imposed at the end of March to prevent a flight of funds from a banking system flush with cash from Russian and European businesses, but also from many overseas Cypriots.

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Archives April 20, 2013 posted by

Anastasiades: joint action the way forward

IN A PACKED room at the Presidential Palace, in front of ministers, MPs, party leaders, and leading businessmen, President Nicos Anastasiades last night announced measures to help kick-start the economy.

At the same time he officially announced the construction of a liquefied natural gas (LNG) plant. 

The measures, drawn up by the cabinet during two days of meetings at the beginning of the week, were five-fold and are aimed at helping vulnerable groups, training unemployed individuals, creating new jobs, helping stimulate economic growth and encouraging environmental development, Anastasiades said in a televised address.

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Archives April 18, 2013 posted by

Plan for new Cyprus vote casts uncertainty on bailout

THE €10 billion aid deal to save Cyprus from bankruptcy has been thrown into fresh uncertainty with news that the island’s  fractious parliament will vote on the final package.

The surprise vote has only just been scheduled, and early signs are that nearly half the members of the 56-seat parliament may oppose the bailout, seen as vital to keep Cyprus in the euro zone.

The Greens Party said yesterday its sole parliamentarian would vote to reject the deal, becoming the first party to announce its intentions.

However, the Communist AKEL and Socialist EDEK parties, which together have 24 seats, have been vocal in their opposition to the bailout, and are seen as likely to vote against, although there is some chance they may abstain instead.

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Archives April 17, 2013 posted by

Before asking others to pay, Germany should honour its own debts


THE DISPUTE originated in the 1920’s when Germany issued series of bearer bonds in the USA for revitalisation of its economy following the devastating effects of WWI. Acting as trustees, financial institutions such as JP Morgan and Lee Higgins & Co. produced and sold bonds in America raising funds that would be invested in Germany. 

These bonds corresponded to Agricultural Loans signed by 14 German banks and guaranteed by the German government. Of these 14 banks four are still active and are part of the troika mechanism. 

From 1933, Germany defaulted on interest repayments to Bondholders, as the new Nazi leadership considered the debt that Germany faced following WWI as illegal and issued a moratorium on bonds owed to foreign investors.

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Archives April 16, 2013 posted by

Raft of measures to aid economy

THE GOVERNMENT is to ease citizenship rules for foreign investors who lost money under an EU bailout deal, as part of a series of planned measures to salvage what it can of its reputation as a business centre.

President Nicos Anastasiades said new steps, mostly affecting the Russian business community, would be approved at a cabinet meeting.

Speaking at a Russian business conference in Limassol on Sunday evening, Anastasiades said the new measures would “mitigate to some extent the damage” Russian investors had endured.

In exchange for a €10bn rescue package, agreed by the EU and IMF, Cyprus must wind down Laiki Bank and write-off a large portion of secured debt and uninsured deposits in the Bank of Cyprus.

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Archives April 12, 2013 posted by

Raft of bailout measures tabled


THE FIRST of a new batch of bailout-linked bills tabled to parliament yesterday includes scaled cuts in public sector salaries and pensions, a hike on the corporate tax rate from 10 to 12.5 per cent and an increase to 30 per cent of the tax rate on interest income.

The fiscal measures are necessary for the government to qualify for a €10 billion bailout from international creditors following an agreement struck last month. More bills are on the way.

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